Abuse of alcohol and other drugs is a frequent diagnosis among people with severe mental disorders (SMD) particularly among those who are homeless. A significant proportion, typically 50% or more, of people with SMD abuse alcohol or other non-prescribed psychoactive substances. Their substance abuse is strongly associated with clinical disability, homelessness, institutionalization, and treatment difficulty. To address this problem, the Connecticut Department of Mental Health has provided 'funding for the creation of a new assertive community treatment (ACT) team to provide integrated treatment for substance abuse and SMD to dually diagnosed clients in Connecticut's largest and poorest city, Bridgeport. The proposed research will be a collaboration between the Connecticut Department of Mental Health and the Dartmouth Medical School to conduct a rigorous evaluation of the effectiveness and costs of the ACT program design for dually diagnosed clients in an urban area where cocaine and other drugs are readily available and widely used. The research will carefully document the interventions provided to clients in the ACT and control conditions to document both what interventions actually occurred and the costs of the interventions so that any differences in clinical outcomes and costs can be attributed to differences identified in the processes of care. The first objective of the project is to decrease the problems most characteristic of dually diagnosed clients: alcohol and drug abuse, housing instability and homelessness, and institutionalization in hospitals and jails. A second objective is to determine whether good outcomes in these primary domains will be associated with more general improvements in symptoms, functional status, and quality of life. A third objective is to identify the qualities of case management that are associated with successful engagement and treatment of dually diagnosed clients. Separate data analysis strategies will be applied to each of these objectives. The research design is a randomized clinical trial. A total of 200 consenting, dually diagnosed clients will be randomly assigned to either ACT or to standard case management. Study participants will be interviewed with standard quantitative instruments at baseline and at six-month followup intervals for three years.